Regulator opens up banks to insurers
By Hu Yuanyuan (China Daily)
Updated: 2006-06-13 09:05
Chinese insurers will be allowed to invest in the listed and unlisted
equities of domestic banks, the latest move to expand insurance companies'
investment channels, the chairman of the regulator told a recent
symposium.
Relevant policies have been approved by the State Council and
will be released soon, said Wu Dingfu, chairman of the China Insurance
Regulatory Commission (CIRC) at the Beijing-Tianjin Insurance Symposium.
The move, together with a package of policies recently put into effect
by the CIRC, follows a trend of strengthened co-operation among the country's
insurance, banking and securities sectors.
In April, the central bank
permitted qualified insurers to purchase foreign exchange for investment in
products with fixed returns abroad.
Wu said that the quota for overseas
investment by insurance companies would be lifted to 15 per cent of their total
assets.
And the proportion of insurance companies' actual stock
investment to their total assets will be boosted from the previous 1 per cent to
4 per cent.
The move is also expected to enhance co-operation between
insurers and banks.
"We support insurance companies' buying into, or even
taking controlling stakes, in well-managed, profitable banks that have a strong
customer base," Wu Dingfu said.
Ping An Insurance, China's
second-largest life insurer, is bidding for a 60 per cent stake in Shenzhen
Commercial Bank through its investment arm Ping An Trust & Investment Co
Ltd.
"But the investment ratio that insurers can put into banks will not
be high," Hao Yansu, an insurance professor with the Central University of
Finance and Economics, told China Daily.
The attraction for insurers
investing in unlisted companies lies in the considerable investment premium,
experts said.
"Once a bank floats its shares successfully, an insurance
company (that has invested in the bank) will rake in a high return," said Wang,
a capital management centre employee at a middle-sized insurance company.
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